In order to participate in the GunBroker Member forums, you must be logged in with your GunBroker.com account. Click the sign-in button at the top right of the forums page to get connected.
Options
Taxable Income for selling on GunBroker?
bailey1955
Member Posts: 5 ✭
How much stuff would I have to sell on GunBroker.com before I need to declare the profit as taxable income?
Comments
Technically, you're supposed to report any sales of anything, even if there is a loss, but the IRS doesn't really enforce that since nearly all the times one sells a used item, one is taking a loss and there is no capital gain. (It's usually impossible to buy items at retail and resell them for any profit.)
Of course, the really annoying thing with the law is that you are supposed to report any gains on something, like the sale of a firearm, (it would be categorized as a "collectable" and taxed at the 28% rate), but you are not allowed to apply losses you take from sales of other items against that (rare) time you might have a gain on something. (In investments, one is allowed to apply capital losses against capital gains.)
If you are buying and selling as a regular business activity trying to make a profit -- and if that buying and selling includes firearms, be aware of the requirements for you to be a licensed FFL to be doing that.
I don't engage in it as a business. Therefore, I feel no obligation to pay taxes on what I've already paid taxes on. If I engaged in it as investing or business, it would be a different story.
How much stuff would I have to sell on GunBroker.com before I need to declare the profit as taxable income?
You should ask your accountant or, if you work for the IRS and are just trolling to find out who pays taxes and who doesn't, you already know the answer. [;)]
How much stuff would I have to sell on GunBroker.com before I need to declare the profit as taxable income?
That's not the right question.
Its not about how much stuff you sell, its about how much profit you make in doing so.
Assuming you're already in a position where you have net tax liability from other income, if you made even one cent of profit re-selling one gun, you're supposed to report it.
Now, realistically, there is only so much the IRS can do, and they don't have the resources or frankly even interest to chase taxes on every profit-making resale in the country.
Unless you're turning over guns on a regular basis, or unless you make a significant amount of money in a single transaction, chances are the IRS will never know or care, and your real-world liability is probably pretty low.
OK Gang it looks like I'm going to need some kind of business software to help me figure out what my profit might be for the year. What do you recommend? I only sell on GunBroker.
Are you sure you're making a profit? If you are, are you doing it as a business, or are you looking at a profit -- and tax liability -- from a capital gains position?
If you're doing this as a business: If you have the record of all your sales for the year, just total them up, then subtract all your expenses (purchases of items for resale and the related business expenses in doing that) and you have your profit (or loss).
If this is just a capital gains potential tax liability, you're going to be subtracting your purchase price (whenever it was made -- maybe 40 years ago) from your selling price. The resulting number -- if positive -- is your capital gains.
Unfortunately, "gains" you can often have on something like a firearm that you may have owned for a long time, may not really be any gain. All you'll be doing is paying capital gains taxes on inflation!
It is insanity that prices are not adjusted for inflation when calculating capital gains, but the whole goal of taxes (and monetary-inflation which results in price-inflation) is to seize your wealth -- capital gains taxes can be particularly vicious in that respect.